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Greece election: opposition party’s main enemy will be time

Mason, P. (2014) “Greece election: opposition party’s main enemy will be time“, Channel 4 News, 21 December.


There’s a quiz doing the rounds on Facebook about Greece’s radical left opposition party Syriza, called “Are You Syriza Enough?”.

The last question is: “Do you think Syriza will succeed as a government?”.

The choice of answers are not flattering to the far left party’s prospects:  No, No way, Haha No, or Nobody believes that.

As the deadline for electing a president looms, and after that an election and possible Syriza government, it’s worth looking at the challenges facing the party’s leader, Alexis Tsipras, if he becomes prime minister.

Because while much of Greek politics is driven by debt, secrecy, rumours and cliques, debt figures don’t lie and nor do tax revenues – at least, not when they’re properly monitored.

Whether the next governmet is a revamped coalition led by the current prime minister’s New Democracy, or one led by Syriza, it will face the same, harsh debt dynamics.

In this post I will try to make sense of the debt picture – drawing on financial market research notes from Eurobank, Renaissance Capital and BoAML – and interviews with two Syriza economic policymakers, conducted in mid-December 2014.

Greece by numbers

Let’s start with the facts. Greece owes 319bn euros divided as follows:

– 205bn to Euro area governments
– 27bn to the ECB
– 31bn to the IMF
– 56bn to private bondholders

Though this is a massive debt, four years of bitter austerity have managed to get the public finances under control.

Unlike Britain, Greece now runs balanced books year on year and is set to run a surplus – though there is an argument with its lenders about how real that is.

The bailout by the Troika (ECB/IMF and EU) is set to end in February 2015. After that, the current centre-right coalition led by Antonis Samaras faces the need to borrow 22bn euros in fiscal years 2015 and 2016.

Eurobank analysts say the solution being discussed is for the EU to extend an “enhanced conditions credit line” from the ESM bailout fund of 9.5bn euros over two years; and for the IMF to lend 12.5bn euros,  meeting Greece’s needs.

But since the original bailout only postponed crunch-time on repaying this massive 319bn euro debt, most observers think there will have to be a further writedown of the debt.


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